Financial institutions evaluating whether they want to drive their own ATMs or outsource that function to a third party tend to focus on two "C"s — cost and control — but a third — confusion — could also play a role in the decision-making process.

Banks are faced with meeting regulatory requirements and deciding whether to incorporate new ATM technologies such as check imaging.

Will these trends favor outsourcing, or will more banks consider bringing their processing in-house? There is no industry consensus.

"Transaction processing technology is undergoing a meaningful upgrade," said Bill Raymond, president of ATM Solutions for Genpass. "Financial institutions with in-house systems must make a change, either investing in an upgrade of the existing infrastructure or looking at outsourcing. The opportunity to continue what they've been doing for the past several years just isn't there anymore."

Time for a change

Alan Falconer, senior vice president of consulting firm Paragon Data Services, said that because banks have been preoccupied with regulatory whammies like Y2K and Triple DES for nearly five years, many have opted to outsource ATM driving. But with the regulatory environment easing somewhat, Falconer foresees an increased interest in ATM technology and more interest in moving processing in-house.

Chris Klein, Mosaic Software’s executive vice president of marketing, said a shift from mainframe to server technology has made it possible for even small banks to consider driving their own ATMs.

Cost was a consideration in Honda Federal Credit Union's decision to purchase a Postilion switch from Mosaic but "not the overriding factor," said Jim Updike, president of Honda Federal. “If you're outsourcing, it's difficult to have them tailor their programs for you,” he said.

Walt Fillmore, chief operating officer of Select Bank said he "did some serious economic analysis" and concluded Select would save some 30 percent by outsourcing its ATM program — including ATM driving — to Genpass.

More importantly, he said, "at our size, I like the idea of having their expertise."

Fillmore believes Genpass will quickly respond to industry trends such as check imaging. "That's going to impact all of their clients, not just me," he said.

Many options for technology

Some technology plays simply make more sense with an in-house processing platform, said Jeffrey Hale, chief marketing officer for ACI Worldwide, a provider of transaction processing software.

"A lot of financial institutions are looking at channel integration; that's going to be inherently harder to do with a third party in the middle of the stream," he said.

Hale believes the industry will see more banks and other financial institutions selecting processing options that are neither truly in-house nor outsourced.

"It's all about division of labor," he said. "The major vendors have systems that allow you to do application work without actually driving your ATMs — so a financial institution can control the personality of its ATMs without worrying about things like transaction feeds and network delivery."